House committee tightens pension laws in wake of Enron

Published: Friday, March 15, 2002

WASHINGTON (AP)  A House committee passed legislation Thursday to tighten pension laws, the first action on any of the bills being considered to prevent the kind of problems brought to light by Enron Corp.'s collapse.

The bill passed 36-2 by the House Ways and Means Committee adopts several principles outlined by President Bush, such as requiring notice of 30 days to participants in 401(k) plans to temporarily suspend account activity and mandating that participants get quarterly account statements instead of yearly.

"This legislation gives workers what they need most  new diversification rights, new disclosure requirements and better access to retirement savings advice," said Rep. Rob Portman, R-Ohio, who sponsored the bill with Rep. Benjamin Cardin, D-Md.

The bill imposes an excise tax penalty of $100 per person for failing to comply with the notice requirements. The maximum would be $500,000 per year.

Both the GOP-controlled House and the Democrat-led Senate have been conducting multiple investigations and hearings into Enron after the energy-trading company became the largest company to file for bankruptcy in U.S. history in December.

The pension bill probably will be merged with other proposals awaiting action in other House committees, and the House could consider a final version next month.

The Senate is following a similar course and is expected to consider its first pension legislation next week in the Health, Education, Labor and Pensions Committee.

The House bill would let workers pay for investment advice with pretax dollars automatically deducted from their paychecks.

Many Enron employees whose 401(k) plans were heavily invested in company stock lost their retirement savings when its value plummeted last year.

But House Republicans do not agree on the best way to educate employees about their retirement savings. An investment advice bill the House passed last year before Enron collapsed would let workers receive financial advice from the same companies that manage their 401(k) accounts. That idea is supported by Bush.

Senate Democrats oppose the idea as a conflict of interest and say it dooms the bill's chances there.

Both the Portman-Cardin bill and Bush's plan endorse letting workers sell matching contributions of company stock after they are vested, usually three to five years. Some plans now require workers to hold onto the stock until they are 55 with at least 10 years of participation.

But the House bill lays out a five-year schedule for selling such stock to avoid flooding and disrupting financial markets.

Democrats failed in an effort to insert a measure that would penalize corporate executives who sell company stock during a blackout period in which workers are barred from accessing their accounts. The bill does not limit such stock sales, though Bush's plan would restrict them.

House Ways and Means Chairman Bill Thomas, R-Calif., said that issue would be better addressed in another committee is considering Enron-related bills.